Correlation Between Matahari Department and Tira Austenite

Can any of the company-specific risk be diversified away by investing in both Matahari Department and Tira Austenite at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Matahari Department and Tira Austenite into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Matahari Department Store and Tira Austenite Tbk, you can compare the effects of market volatilities on Matahari Department and Tira Austenite and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Matahari Department with a short position of Tira Austenite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matahari Department and Tira Austenite.

Diversification Opportunities for Matahari Department and Tira Austenite

-0.51

Correlation Coefficient

Matahari Department  Tira Austenite

Excellent diversification

The 3 months correlation between Matahari and Tira is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Matahari Department Store and Tira Austenite Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tira Austenite Tbk and Matahari Department is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Matahari Department Store are associated (or correlated) with Tira Austenite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tira Austenite Tbk has no effect on the direction of Matahari Department i.e., Matahari Department and Tira Austenite go up and down completely randomly.

Pair Corralation between Matahari Department and Tira Austenite

Assuming the 90 days trading horizon Matahari Department Store is expected to under-perform the Tira Austenite. But the stock apears to be less risky and, when comparing its historical volatility, Matahari Department Store is 1.53 times less risky than Tira Austenite. The stock trades about -0.27 of its potential returns per unit of risk. The Tira Austenite Tbk is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  51,500  in Tira Austenite Tbk on September 1, 2024 and sell it today you would lose (2,300) from holding Tira Austenite Tbk or give up 4.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Matahari Department Store  vs.  Tira Austenite Tbk

Matahari Department Store

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Matahari Department Store has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Tira Austenite Tbk

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tira Austenite Tbk are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Tira Austenite disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Matahari Department and Tira Austenite

The main advantage of trading using opposite Matahari Department and Tira Austenite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matahari Department position performs unexpectedly, Tira Austenite can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Tira Austenite will offset losses from the drop in Tira Austenite's long position.

The idea behind Matahari Department Store and Tira Austenite Tbk pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.